Selling a Green Deal property? What you need to know before you do

Problems can arise when it comes to selling a home with a 'Green Deal'. Here's what you need to know before putting your property on the market.

The Green Deal Loan

If you signed up to the government's Green Deal in order to make energy-saving improvements to your property, you may have taken a loan to cover the cost of the installation of the improvements. The loan will be for a fixed term at a fixed rate of interest and could still have several years to run – 15 to 20 years is a typical loan period.

Repayments are automatically made through your electricity bill, and the loan stays with the property when you move out. Therefore you must inform any buyer that the Green Deal is in place.

What must I do?

Question 7.7 on the TA6 Property Information Form asks if any installations to the property have been financed through the Green Deal scheme. A new Energy Performance Certificate (EPC) should have been provided when the work was completed, and this details the work carried out and the repayment terms. You will also be required to provide a copy of your electricity bill.

Does the buyer have to stay with the same electricity provider?

The buyer may switch electricity supplier providing the new company is a participant in the Green Deal. All the major energy providers (British Gas, EDF, Eon, Npower, Scottish Power and SSE) are part of the scheme, although some of the smaller suppliers may not accept Green Deal customers. The loan will move to the new provider.

Might having a Green Deal in place put off potential buyers?

To make the scheme affordable, the repayment figures are not supposed to exceed the financial savings made by the improvements, meaning the homeowner should not experience any increase in overall cost after the work has been done. However, buyers expect improvements to be already reflected in the asking price, rather than a long-term ongoing payment.

Even if energy bills might be lower over the long-term, improvements that cost £10,000 with repayments of £90 a month for the next 10+ years may mean the buyer negotiating a lower offer.

Could I pay off the loan before selling my house?

Are there any fees?

If the loan was taken out before May 2014, there should be no early repayment fees. Similarly there are no fees for early repayments for loans of less than £8,000 over a 15-year (or shorter) term.

Larger loans taken before May 2014 typically attract fees of up to a maximum of 1% for plan durations of less than 15 years For Green Deals longer than 15 years, there is a maximum charge of £6 for each year left on the loan for every £1,000 you want to repay early.

For example; an outstanding loan of £10,000 with 13 years still to run of a 15+ year term will attract an early repayment fee of £900, on top of the £10,000 still owing.

About the author

Gaynor Haliday is an experienced legal researcher and published author. She has had numerous articles published in the press and is a legal industry commentator.

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Freehold

Freehold is when you own the property and the land on which it is built. You will not have a landlord or pay any service charges. Houses are usually freehold.

Leasehold

Leasehold typically applies to flats. You will have a defined lease term (e.g. 99 years) and will probably pay service charges and ground rent to a landlord or freeholder.

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